The COVID-19 pandemic in 2020 made an impact like nothing else. This was felt across various industries. However, one, in particular, has managed to weather the storm – the real estate industry.
This analysis will discuss what happened during and after the pandemic. If you want to learn more about what happened during the last few years, you can check out this real estate podcast. It will provide you with a lot of insights and trends from the real estate world.
Let’s take a look at some of the facts of what we know about the real estate industry during and after the pandemic.
There was a limited supply of new homes
To begin with, there was a limited supply of new homes that were available. This was due to the fact that construction was halted on current projects. Other projects that hadn’t started yet were postponed due to health and safety reasons (like social distancing).
Also contributing to the supply was the stoppage of the supply chain. Meaning there was disruption and even a shortage. To top it off, the restrictions slowed things down.
This also led to another event that occurred in the housing market.
House prices increased dramatically
With the supply of new homes limited, this led to home prices increasing at an alarming rate. Meaning it may benefit sellers in a market that can favor them. This could also give them the opportunity to sell their homes at the elevated listing price or more.
The market soon started to heat up, and the demand for people buying new homes was rising, especially in parts of the United States where there were several factors that attracted them to a new area. For some, they were willing to shell out the extra cash to purchase a home.
States with low or no income taxes benefited
Of all the hottest real estate markets in the country, many of them were in states with a common denominator. The states had low or no state income tax. Which meant the new residents would have more money in their pockets every year.
Two states that benefited from this include Texas and Florida, which both don’t have a state income tax. Not only that, many people moved away from cities and opted for smaller towns. This can be due to the fact that the cost of living was much cheaper in smaller populated areas than in larger cities and suburbs.
Many of them moved to a new part of the country out of a knee-jerk response. Nearly two-thirds of millennials who have bought houses are even suffering from buyer’s remorse. As for everyone else, they may be benefiting from financial rewards such as saving money on basic goods and paying fewer taxes.
Many people may be buying homes with an extra bedroom
This may come as no surprise. But some homebuyers may be willing to purchase a new home with one more bedroom than they need. The reason for this: it is a home office.
Those who work remotely can benefit from using extra space to serve as their office. Whether they work for a company or themselves, it gives them a place to concentrate and get the job done. Furthermore, it also reduces their commute by a lot.
No longer would they drive to an office and get caught up in traffic. It can take just a few paces from their bed, and they’re off to work. Will this be a commonplace thing in the real estate world?
With more companies going remote, that seems to be the case. They may not be comfortable with working at a kitchen table or a coffee shop that has WiFi. They need the space (not to mention the tools and resources they need).
First-time buyers aren’t struggling as bad
First-time home buyers may be dealing with an issue such as being priced out of the market due to the increasing prices. However, they might be finding themselves more at an advantage than not. That’s because a lot of other homebuyers are feeling the same way.
Thinking outside of the box, they see themselves as not dealing with a lot of competition. So they might get the house they want and not worry about losing out. With a lot of people not wanting to buy at the moment, it can be a clear path for first-time homebuyers for quite some time.
Especially with the increasing home prices, it will give them enough time to save up. And when the time comes, they’ll find the home they want and put in an offer.
Sellers are getting plenty of offers
This may sound like a contradiction to our previous point. But the homebuyers that are taking advantage of the low competition are putting in the offers. And sellers are receiving a lot of them.
They might feel pressured to choose the best offer that meets their needs. So the process can be time-consuming for sellers who want to get the deal done quickly. Multiple offers can be overwhelming – but they can only choose one.
So it would be ideal for a seller to mull over the offers, choose the best one, and move on with the next chapter in their lives. The decision won’t be easy, but at least the worst will be over.
Final Thoughts
The pandemic made an impact on the real estate market in so many ways. It wasn’t affected negatively in the slightest. But there were some challenges that were presented, such as the limited supply of new homes.
Nevertheless, things are starting to slowly crawl back to normal. Yet, the market is looking good for many people. Whether it’s homebuyers, sellers, or real estate investors, it’s looking like a feeding frenzy out there.
The future may be looking bright for real estate. Things could cool down over the next few years. And the new trends we’re starting to see, like buying a home with an extra bedroom, could be the new normal.
